ACCOUNTING POLICY & PROCEDURES WORKSHOP

2. ACCOUNTING POLICY & PROCEDURES WORKSHOP

3. Workshop aims • Understand importance of internal controls and mitigation of risks • Understand company accounting policies and procedures • Understand effects of breaches and discuss how to avoid them

4. Workshop overview • Internal controls overview • Accounting policies and procedures • Credit notes analysis • Summary workflow analysis • Problems encountered

5. INTERNAL CONTROLS OVERVIEW

6. Internal controls objectives • Existence (Validity) • Occurrence (Cutoff) • Completeness (i.e., no omissions) • Valuation • Rights & Obligations • Presentation & Disclosure (Classification): • Reasonableness

7. Internal controls activities • Segregation of duties • Authorization of transactions • Retention of records • Supervision or monitoring of operations • Physical safeguards • Analysis of results, periodic and regular operational reviews and other KPI’s • IT Security

10. ACCOUNTING POLICY AND PROCEDURES A Brief Overview

11. Invoicing • Must be in numerical sequence • All fields must be entered • Any break in sequence shall only be for cancelled invoices and documented on the daily batch return • Invoices incorrectly raised – cancel and issue new one unless batch has been sent to HQ • What about incorrect invoices already sent to HQ?

12. Invoicing • Supervisor who knowledgeable about tariff charges certifies invoices as correct before dispatch MTME – SCNT - SCNV - HAND - GEAR - TORS - LVES -

13. Batches • Batches must be sent on daily basis to HQ • LTK and LEV can send theirs weekly • Batch headers must be filled completely and entered Why batch? • Ensures completeness and accuracy • Provides a reference and summary of the invoices batched ANY LOSS OF INVOICE BOOKS MUST BE REPORTED

14. Credit administration • No credit is to be given to any customer unless prior approval has been made through Finance HQ • Application for credit facility scrutinized at Finance HQ • Any variation to accounts can only be approved through GMF in writing • Credit limits will be reviewed by Accountant with consultation with GMF

15. Credit administration • Accountant/GMF shall approve all actions/credit transactions before ARP actions • Credit terms shall not exceed 30 days from date of monthly statement

16. Receipts • Cash only received at designated receipt locations • Foreign currency payments not allowed • Bank drafts not considered unless approved by GMF • Cheques accepted from approved customers only. • Cheques to be marked ‘not negotiable’ and made to ‘Fiji Ports Corporation Limited’

17. Returned cheques • Returned cheque are imposed charges • Notification letter is sent within 7 days asking payer to pay within 7 days • No response within 10 days, second letter is sent • Legal action (cost-benefit) if still no response • Charges: <$300 – $25 >$300 - $40

18. Banking • Daily banking to be done unless cash is less than: $1,000 – Suva HQ $500 – Revenue office $100 – Others • Banking batch should be sent to HQ daily/weekly • Supervisor must check all banking summary

19. Reporting • Summary of invoices and revenue report by the 2nd working day after month end

20. CREDIT NOTES ANALYSIS

21. Credit Notes approved FPCL - $ $96,666.56 – 2010 - $ $184,061.58 – 2009 PTL - $155,601 - 2010 - $63,859.60 - 2009 • Credit notes shows wrong revenue was reported in a previous month • Credit notes shows breakdown in internal controls • Credit notes are a reflection of inefficiencies

22. Summary workflow

23. Problems encountered • Invoices • Late batches • Wrong order charged to company • One order number two invoices are raised. • invoices raised late • Wrong information on batch summary • Invoice raised to customer not our debtor • Wrong charges • Invoices charged to wrong order or does not conform to work done In

24. Problems encountered Receipting and Banking • Receipting entered in the wrong codes. • Late banking • Batch summary not correct • Cancelled receipts not in batch • Duplicate invoicing

25. Cost of mistakes • Waste of time • Cost in dollars • Stress (regular communication from HQ) • Cash flow is affected • Debtor account is messy and makes us look like we are not doing work • Performance is affected

26. Common Causes of Revenue Leaks • Discounts, incentives and alternative arrangements are not always communicated accurately between HQ, operations and finance, resulting in errors and customer disputes. • Manual invoicing system result in lost revenue and/or additional costs. • Failure to reconcile properly work done to invoice results in unbilled work • Resolving incomplete or inaccurate information will result in items not progressing to the next stage, however errors or omissions left unresolved result in billing or collections difficulties.

27. Common Causes of Revenue Leaks • Incomplete or inaccurate manifests result in delay-related costs. • Unclear or inaccurate terms result in disputes between parties • Late invoicing may become uncollectible over time. • Disputes time is extended and collectibility becomes difficult when customer disputes cannot be resolved quickly due to the lack of accessible logistics data, and historical account information.

28. Questions and Discussions……